One of the great bluffs in the foreign policy community in the previous decade was that Israel would have no choice but to attack Iran’s nuclear facilities unless Washington stepped up and took military action first. With predictable frequency since the mid-1990s, reports emerged claiming that Israel was months, if not weeks, away from bombing Iran. And every time a new dire warning was issued, a new rationale was presented to convince the world that the latest Israeli warning was more serious than the previous one. The Israeli threats, however, were bluffs all along. Israel did not have the capacity to take out Iran’s nuclear facilities. But the huffing and puffing ensured that the American military option remained on the table; that Washington would not deviate from the Israeli red line of rejecting uranium enrichment on Iranian soil; and that the Iranian nuclear program was kept at the top of the international community’s agenda.

But the persistent bluffing also carried a price. The Israeli narrative on Iran has grown increasingly alarmist, desperate, and existential over the past 15 years. Inflating the Iranian threat served several purposes domestically. It provided Israeli Prime Ministers Yitzhak Rabin and Shimon Peres a rationale to push for peace with the Palestinians in the 1990s, while more recently Benjamin Netanyahu has used it to resist pressure from Washington to do just that. But the domestic benefits came at the price of limiting Israel’s options and flexibility vis-à-vis Iran. As Israeli politicians built up the Iranian threat and established a near-consensus that Tehran constituted an existential threat, it became increasingly difficult for any Israeli politician to walk back the threat depiction without losing critical political capital at home. As a result, there was a steady escalation of the threat depiction from Iran and no clear ways to de-escalate.

I wrote about this in the Forward in late 2007, pointing out that Israel was suffering from strategic paralysis due to its inability to adjust to the region’s new realities and walk back its alarmist position on Iran. Today, Israel’s strategic position in the region is at even greater risk. In the past few years, for instance, tensions have steadily increased between Israel and Turkey with the friction reaching a boiling point after the Gaza flotilla incident in 2010. As a result, the strategic alliance with Turkey seems to be lost for the foreseeable future. Now, with the fall of the Mubarak regime in Egypt, Israel has lost its most important Arab ally. Thus, the cost of the strategic paralysis is greater today than it was even a few years ago.

Against this backdrop, statements by both Israeli Defense Minister Ehud Barak and former Mossad Chief Meir Dagan in the past few days have stirred the political pot in Israel and made headlines worldwide. Speaking at a conference in Jerusalem, Dagan said that bombing Iran’s nuclear installations would be "a stupid idea," adding that military action might not achieve all of its goals and could lead to a long war. Numerous Israeli officials have derided him for undercutting the pressure on Iran.

Yet, Dagan is not the first Israeli to contradict the official Israeli line shortly after leaving office. His predecessor at the Mossad, Efrahim Halevi, challenged a related Israeli talking point on Iran after having retired — the idea that the Iranians are irrational and as a result neither containment nor diplomacy can be pursued. "I don’t think they are irrational, I think they are very rational. To label them as irrational is escaping from reality, and it gives you kind of an escape clause," he told me in 2006.

Similarly, on the eve of his departure from political life, outgoing Israeli Prime Minister Ehud Olmert delivered a stinging parting shot in 2008 questioning the feasibility of an Israeli military strike against Iran’s nuclear facilities. Olmert told the Israeli daily Yedioth Ahronoth that Israel had lost its "sense of proportion" when stating that it would deal with Iran militarily. "What we can do with the Palestinians, the Syrians and the Lebanese, we cannot do with the Iranians," Olmert said. "Let’s be more modest, and act within the bounds of our realistic capabilities," he cautioned.

One of the few Israeli leaders who has consistently cautioned against Israel’s alarmist line on Iran is current Defense Minister Ehud Barak. Earlier this week, he warned against hysteria on the Iranian threat and argued that Iran is unlikely to attack Israel with a nuclear bomb. "I don’t think in terms of panic," he said. "What about Pakistan, some political meltdown happens there and four bombs wind up in Iran. So what? So you head for the airport? You close down the country? Just because they got a shortcut? No. We are still the most powerful in the Middle East." Barak’s position on this matter is not new. He warned against making Israel a target of Iran by inflating the Iranian threat as far back as 1993. "We should, therefore, not create a climate of hysteria by setting ourselves up as Iran’s main target," Barak said according to Agence France Presse.

Dagan’s challenge to the official Israeli line may have been calculated to do exactly what no sitting Israeli Prime Minister seems capable of doing — breaking the strategic paralysis, and to stop painting Israel in a corner where pressure on the U.S. to attack Iran chips away from Israel’s credibility due to its repeated inability to fulfill its threats.

If so, Dagan’s move may not just enable Israel to more effectively adjust itself to the new regional realities, it may also enable Washington to address the broader set of challenges presented by Iran that have been neglected — which include Iran’s regional policies, its human rights abuses, and the repression of the Iranian people’s struggle for democracy. Dagan’s injection of realism, by reducing the nuclear hysteria that has inhibited America’s maneuverability, may free Washington to paint itself out of its own nuclear corner and begin working to address the totality of the Iranian challenge.